A Biden Administration proposal to create new reporting requirements for financial institutions is far more expansive than expected, financial trade groups told the House Ways and Means Committee this week.
“Rather than a targeted program, this proposal would create a dragnet, collecting the financial information of most Americans and requiring significant resources to build, police, and maintain,” the groups, including the National Association of Federally-Insured Credit Unions, the Credit Union National Association and banking trade groups wrote in a letter to committee members.
The committee’s Oversight and Select Revenue Measures Subcommittee held a hearing Thursday afternoon on the so-called “tax gap.”
Treasury Department officials have said they believe the requirement would improve Internal Revenue Service enforcement. “Requiring comprehensive information reporting on the inflows and outflows of financial accounts will increase the visibility of gross receipts and deductible expenses to the IRS,” the Treasury Department said in its annual “Green Book,” a document that explains the administration’s revenue measures. The department said the reporting requirement would apply to all business and personal accounts from financial institutions that have “gross flow thresholds” over $600.
The financial trade groups said that while administration officials earlier this year said the reporting requirements would only apply to the wealthiest taxpayers, the actual proposal is much more expansive. “The limited additional information included in the Green Book suggests that this new regime could be exceptionally expansive and comprehensive, covering the accounts of most Americans, rather than only the “wealthiest,’” the groups said.
They argue that the proposal would impose costs for financial institutions that are not justified by the “potential, and highly uncertain, benefits.”
The groups added “This proposal will have real costs, not only for government, but also for financial institutions, small businesses, and individual taxpayers,” adding that it is not clear whether the requirement actually would improve the IRS’s ability to identify people or companies that are failing to report income.